Andrew Bartels Vice President Forrester Research


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Andrew Bartels Vice President Forrester Research

  1. 1. May 11, 2004. Call in at 12:55 pm Eastern Time Andrew Bartels Vice President Forrester Research ForrTel: B2B eCommerce Trends And Opportunities
  2. 2. B2B eCommerce still growing Extranet/Private eMarket Public eMarket $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
  3. 3. Online buying of both direct and indirect materials growing Source: Forrester/ISM Survey 0% 2% 4% 6% 8% 10% 12% 14% 2001: Q1 2001: Q3 2002: Q1 2002: Q3 2003: Q1 2003: Q3 Direct materials, all Indirect materials, all
  4. 4. But mostly between large companies 50%-60% 5%-10% Over $1B in revenues $100M to $1B in revenues $10M to $100M in revenues 10%-15% 10%-15% B2B buyers B2B sellers 5%-10%
  5. 5. B2B buying driving B2B selling <ul><li>Eager B2B buyers: </li></ul><ul><ul><li>Large companies investing in eProcurement and eSourcing solutions to reduce cost of goods and services purchased </li></ul></ul><ul><li>Reluctant B2B sellers: </li></ul><ul><ul><li>Most small and midsize companies scared of online sales due to fears of becoming commoditized </li></ul></ul><ul><ul><li>A few early adopter leaders, especially large companies and those in technology </li></ul></ul>
  6. 6. Online buying activity still lags Source: ISM/Forrester Report On Technology In Supply Management: Q3 2003 <ul><li>Average percent of spending </li></ul><ul><li>Indirect materials purchased via the Net </li></ul><ul><li>Direct materials purchased via the Net </li></ul><ul><li>Percent of companies </li></ul><ul><li>Purchased goods through an online auction </li></ul><ul><li>Used an eProcurement application </li></ul><ul><li>Used the Net as part of an RFP process </li></ul>Percent of all firms 12% 13% 24% 44% 69%
  7. 7. But large firms doing more Source: ISM/Forrester Report On Technology In Supply Management: Q3 2003 Firms with more than $500 million in spending <ul><li>Average percent of spending </li></ul><ul><li>Indirect materials purchased via the Net </li></ul><ul><li>Direct materials purchased via the Net </li></ul><ul><li>Percent of companies </li></ul><ul><li>Purchased goods through an online auction </li></ul><ul><li>Used an eProcurement application </li></ul><ul><li>Used the Net as part of an RFP process </li></ul>19% 20% 54% 67% 80%
  8. 8. A glass floor for eProcurement and eSourcing Fortune 200 Upper mid-tier ($0.5B-$1B) Lower midtier ($50M $500M) Small (Under $50M) Large ($1B-$10B) Smaller companies have limited leverage over suppliers (for deals, participation) Mainly large enterprises have adopted eSourcing and eProcurement % of direct materials bought online, Q3 2003 32% 16% 14% 10% 7%
  9. 9. Large companies dominate B2B buying 89% 25% 10% 9% 22% 17% 23% 20% 29% 52% 1% 0.2% 0% 25% 50% 75% 100% Share of companies Share of total buying Share of online buying Fortune 200 $1B - $10B $100M - $1B $10M - $100M
  10. 10. B2B buying: key mistakes <ul><li>Buying a product before changing the processes </li></ul><ul><li>Starting with eProcurement instead of with eSourcing </li></ul><ul><li>Underestimating supplier enablement gap </li></ul><ul><li>Viewing B2B buying as a one-time solution instead of a repeated process </li></ul><ul><li>Failing to participate in B2B eCommerce </li></ul>
  11. 11. Road map to success <ul><li>Implement P-Cards to get process savings, process changes, initial data on MRO spend </li></ul><ul><li>Use spend analysis tools to get granular detail on MRO spend, savings opportunities </li></ul><ul><li>Use eSourcing for high-spend categories to get better deals from fewer suppliers </li></ul><ul><li>Use eProcurement to get employee compliance with sourcing policies </li></ul><ul><li>Repeat Step 2 and Step 3 </li></ul>
  12. 12. Organizing for spend management effectiveness <ul><li>Best when CFO is executive sponsor </li></ul><ul><li>For spend analysis and sourcing, organize centrally, deploy geographically </li></ul><ul><li>For MRO eProcurement, set standard centralizing, deploy unit and geography </li></ul><ul><li>For services procurement, deploy department by department using global platform </li></ul>
  13. 13. eProcurement and eSourcing vendor landscape eProcurement eSourcing Services General indirect Direct materials SAP, Oracle, ICG Commerce Elance, Fieldglass IQ Navigator Ariba, PeopleSoft i2 Ketera, Perfect Commerce, ePlus SSA GT (Baan), Lawson ATKPS , B2eMarkets, Emptoris, FreeMarkets*, Frictionless, Global eProcure, Procuri Spend analysis Softface*, Zycus Iasta * Acquired by Ariba in 2004
  14. 14. B2B selling: three channels <ul><li>Via sales forces </li></ul><ul><ul><li>Salespeople place their orders online </li></ul></ul><ul><li>Direct sales </li></ul><ul><ul><li>Customers place their orders online </li></ul></ul><ul><li>Via partners </li></ul><ul><ul><li>Distributors or sales partners place their orders online </li></ul></ul>Sales
  15. 15. B2B selling: key mistakes <ul><li>Ignoring impact of B2B Web site on other channels </li></ul><ul><ul><li>Launching a B2B Web site before enabling sales people to place orders online </li></ul></ul><ul><ul><li>Failing to understand requirements and needs of channel partners </li></ul></ul><ul><li>Underestimating catalog management requirements </li></ul><ul><li>Failing to integrate Web site with telephone call center </li></ul><ul><li>Focusing on small/midsize customers instead of larger ones </li></ul><ul><li>Failing to participate in B2B eCommerce </li></ul>
  16. 16. B2B selling: Key requirements <ul><li>Have an electronic catalog </li></ul><ul><li>Be able to receive and respond to electronic purchase orders in standard formats </li></ul><ul><li>Customize catalog per contract requirements </li></ul><ul><li>Personalize content by company and by employee roles and authorities </li></ul><ul><li>Integrate directly into buying system of strategic customers </li></ul>
  17. 17. B2B selling: Process changes <ul><li>Sales force channel: </li></ul><ul><ul><li>Provide online order-placement Web site </li></ul></ul><ul><ul><li>Train and motivate sales force to use </li></ul></ul><ul><li>Direct online sales channel: </li></ul><ul><ul><li>Get sales force onboard first </li></ul></ul><ul><ul><li>Implement commerce server solution </li></ul></ul><ul><ul><li>Address channel conflict issues </li></ul></ul><ul><ul><li>Redesign production and fulfillment systems for online orders </li></ul></ul><ul><li>Channel partner/reseller channel: </li></ul><ul><ul><li>Understand partner interest and needs </li></ul></ul><ul><ul><li>Address channel conflict issues </li></ul></ul><ul><ul><li>Implement partner relationship management solution </li></ul></ul><ul><ul><li>Train and motivate partners to use Web site </li></ul></ul>
  18. 18. The importance of catalog management Suppliers Seller’s Web site Procurement portals Distributor site eMarkets Load product information Syndicate product information Normalize product information 1 2 3 4 Aggregate Extract Cleanse Distribute XML stream Change stream
  19. 19. Commerce server market by size and price Under $50K Over $500K BroadVision BEA Ironside SAP Oracle Siebel $50K-$100K $100K-$250K $250K-$500K Microsoft HAHT Blue Martini PeopleSoft ATG IBM
  20. 20. Partner relationship management market Brand management focused eCommerce focused Partner relationship-focused <ul><li>MarketSoft </li></ul><ul><li>Onyx </li></ul><ul><li>Pivotal </li></ul><ul><li>Webridge </li></ul><ul><li>Web Collage </li></ul><ul><li>IBM </li></ul><ul><li>Azerity </li></ul><ul><li>Firepond </li></ul><ul><li>Trilogy </li></ul><ul><li>Channelwave </li></ul><ul><li>Click Commerce </li></ul><ul><li>Comergent </li></ul><ul><li>PeopleSoft </li></ul><ul><li>Siebel </li></ul><ul><li>Oracle </li></ul><ul><li>Onyx </li></ul><ul><li>HAHT </li></ul><ul><li>SoftAd </li></ul><ul><li>InfoNow </li></ul>
  21. 21. Conclusion <ul><li>B2B buying and selling via the Internet are becoming essential </li></ul><ul><li>But the Internet coexists with other channels </li></ul><ul><li>Applications are becoming more mature, part of larger application offerings </li></ul><ul><li>For B2B buying, procurement, and sourcing process changes are key factors for success </li></ul><ul><li>For B2B selling, sales channel management is key for success </li></ul>
  22. 22. Summary <ul><li>Companies are increasingly purchasing online because of the real savings </li></ul><ul><li>Process changes produce the greatest savings </li></ul><ul><li>Successful online buying is an eight-stage cycle </li></ul><ul><li>Repeated cycles create sustainable supply management </li></ul>
  23. 23. Thank you Andrew Bartels [email_address]